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Bank Lending to Agriculture in a Small Developing Country

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This paper explores bank lending to agriculture in Fiji, a small developing country. It examines bank lending by bank type—commercial bank lending and lending by the Fiji Development Bank ( fdb), a non-commercial bank. The findings reveal the importance of both banking types as well as a significant drop in lending since 1993, despite the need to fund the agricultural sector to boost food production activities. Interest rates, government spending and food production strongly determine fdblending to agriculture. The availability of arable land has a negative and significant effect on fdblending to agriculture. The results show commercial banks are performing a slightly different role in the agricultural sector than the Fiji Development Bank; they appear to be unresponsive to economic variables that the fdbis responsive to.

Affiliations: 1: Department of Economics and Finance, College of Economics and Political Science, Sultan Qaboos University ; 2: Department of Economics and Finance, Waikato Management School, The University of Waikato


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